Vitalik Buterin Sees Opportunity as Sweden and Norway Abandon Cashless Goals

Summary

• Nordic Reversal on Cashless Societies: Sweden and Norway are backing away from their cashless society goals due to the fragility of centralized digital payment systems, prompting discussions about decentralized alternatives like Ethereum.

• Buterin Sees Ethereum’s Potential, Acknowledges Challenges: Ethereum co-founder Vitalik Buterin views this shift as an opportunity for decentralized systems but emphasizes that Ethereum needs to enhance its resilience and privacy to be a credible alternative, with offline functionality being a major hurdle.

• Mixed Expert Opinions on Ethereum’s Readiness: While some DeFi experts believe Ethereum is already robust enough, others highlight critical limitations such as the need for electricity and internet, and point out that even solutions like stablecoins or experimental offline payment tech face their own resilience and privacy concerns.

Sweden and Norway are re-evaluating their push towards completely cashless societies following the realization that their centralized digital payment infrastructures are susceptible to disruption.

This shift has prompted Ethereum co-founder Vitalik Buterin to suggest that decentralized networks like Ethereum could offer more resilient alternatives, although he concedes that substantial technical hurdles must still be overcome.

Nordic Shift Away from Cashless Societies Prompts Decentralized Solutions Discussion

While some cryptocurrency proponents assert that existing decentralized finance (DeFi) protocols are already sufficiently robust, others highlight significant limitations, including the fundamental need for electricity and internet access.

The reconsideration by Sweden and Norway, where centralized payment systems were found to be vulnerable during infrastructure failures, has sparked discussion in the cryptocurrency community about the potential for decentralized systems to fill this role.

Buterin commented on this development via X, stating, “Nordics are walking back the cashless society initiative because their centralized implementation of the concept is too fragile.”

His remarks were in response to a Guardian report detailing that both nations now mandate citizens to hold cash reserves.

Previously, Sweden had seen cash transactions fall to just 1% of its total, and Norway’s Vipps application had become dominant in commerce.

Geopolitical events, such as Russia’s invasion of Ukraine, have underscored how attacks on infrastructure could incapacitate entire payment networks, leading Buterin to affirm that “Cash turns out to be necessary as a backup.”

Buterin’s Perspective: Ethereum’s Path to a Credible Cash Alternative

Reflecting on the situation in Sweden and Norway, Buterin offered a considered perspective on Ethereum’s potential.

He wrote, “Ethereum needs to be resilient enough, and private enough, to be able to credibly play this kind of role.”

Debate: Is Ethereum Ready to Replace Cash?

The debate on whether code can replace cash is ongoing.

Sam MacPherson, CEO of DeFi protocol development firm Phoenix Labs, expressed a different view from Buterin, telling Decrypt, “Ethereum is already there.

It is designed to be as resilient to hostile actors as possible,” pointing to DeFi protocols that manage billions in assets without significant systemic failures.

He claimed such decentralized systems are “designed to be as secure as possible from the ground up.”

Technical Challenges: Offline Functionality and Privacy

Despite this optimism, the challenge of offline functionality remains a primary obstacle if Ethereum is to serve as a more robust alternative to physical cash.

Without power or internet connectivity, Ethereum inherently cannot function independently.

Buterin acknowledged that zero-knowledge proofs could theoretically facilitate offline payments, though he noted these are still in experimental stages and rely on “trusted hardware and/or post hoc enforcement against double-spenders.”

The Role of Stablecoins and Lingering Resilience Questions

Stablecoins, which are pegged to fiat currencies like the U.S. dollar, could present another avenue.

Anthony Anzalone, founder of XION, a walletless blockchain platform, suggested to Decrypt that “Stablecoins are an exact solution to this scenario.”

He explained that their usage has “exploded” because they are not “reliant on one centralized party,” making them particularly relevant for countries with “unstable governments and currencies.”

However, stablecoins also face scrutiny regarding their resilience, particularly concerning privacy.

Harrie Bickle, documentation lead at NodeOps, an AI-powered orchestration layer, told Decrypt, “While there are several privacy protocols with the potential to make Ethereum private enough to act as a meaningful alternative to cash, resilience is another issue altogether.”

Bickle added that for Ethereum to prove its resilience in crises like those faced by Sweden and Norway, it would need to operate without users strictly needing “access to electricity, secure operating systems, and unhackable Web3 wallets,” highlighting practical limitations.

He concluded, “We must travel a long way down an, as yet undeclared, roadmap before Ethereum will be resilient enough to replace cash transactions.”

Also Read: Vitalik Buterin Plans For Ethereum’s Bitcoin Transition

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